Collins probes contracting practices that led to TSP debacle

Collins probes contracting practices that led to TSP debacle

By Jason Miller

Aug 21, 2003

The Senate Governmental Affairs Committee is questioning the contracting practices that led the Federal Thrift Retirement Investment Board to spend $36 million on a new record-keeping system from American Management Systems Inc. of Fairfax, Va., and receive nothing in return.

Sen. Susan Collins, R-Maine, chairwoman of the committee, Aug. 21 asked the board to submit all records relating to the two contracts to build the system, and a subsequent lawsuit filed by the board. Collins established the inquiry to determine where the contracting practice broke down and what can be done to improve it.

The board fired AMS after the firm had worked on the project for four years, and hired Matcom International Corp. of Alexandria, Va., to take over the job. The system launched in June, six years after work began and two years after Matcom took over from AMS.

The board also sued AMS for $350 million in damages. AMS and the board settled the lawsuit in June, with AMS paying the agency $5 million [See story at www.gcn.com/vol1_no1/e_gov/22544-1.html].

In a letter to investment board general counsel Elizabeth Woodruff, Collins asked for eight sets of records, including the contract and amendments between the board and AMS, the new contract for the record-keeping system with Matcom and communications between Roger Mehle, former board executive director, board members and AMS.

Collins spokeswoman Andrea Hofelich said the oversight is intended to improve contracting practices, not to chastise the board. But she said the senator is concerned that the board is charging plan participants 30 cents for every $1,000 they have invested to cover the funds lost in the contract with AMS.

Hofelich said Collins would not decide to hold a hearing on the contracting practices until after she reviews the documents from the board, which are due by Aug. 29.

'It is outrageous that a federal agency spent tens of millions of dollars in retirement savings on a system that it couldn't even use,' Collins said. 'That's an example of wasteful spending that should never be repeated.'